TWTR – Twitter, Inc. – Shares in Twitter are sliding today, down as much as 8.0% to $63.50 during morning trading on a downgrade to Underweight from Equal-weight with a price target unchanged at $33.00 at Morgan Stanley. The stock has since bounced off the lows to trade down less than 5.0% on the session at $65.68 as of 11:35 a.m. EST.
Activity in the 21 Feb ’14 expiry call options caught our attention today, with the $75/$85 call spread trading more than 14,000 times within the first two hours of the opening bell. It looks like the spread is being purchased at an average premium of $2.20 each. The bullish trade makes money if shares in Twitter rally 17.5% over the current price of $65.68 to exceed the average breakeven point at $77.20 by expiration, with maximum potential profits of $7.80 per contract available in the event of a 30% upside move in the share price to $85.00 during the next six weeks.